Unless you have been living under a rock we assume you’ve heard the speculation about Speculation Tax (see what we did there). The speculation tax is designed to help make the housing market of urban areas more affordable and available by encouraging homeowners to rent out their homes and not leave them vacant. The areas affected include Metro Vancouver, the Capital Regional District (excluding the Gulf islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.
Who this affects
The speculation tax while seemingly terrifying, because, you know it’s potentially going to mean you pay MORE TAX will actually only impact 1% of residents and homeowners with BC properties.
The types of homeowners that will be impacted are:
- If you are a resident of BC who owns a home but you aren’t living in it you will be taxed 0.5% of the value of your home unless your home is worth less than $400,000.
- Out of province homeowners who own a home in BC that they don’t live in or rent out for at least 6 months of the year will be taxed 1% of the value of the home.
- Foreign owners who don’t pay taxes to BC and who don’t reside in the home or rent it out for a minimum of 6 months out of the year will be taxed at 2%.
The 3 types of people who fall into the speculation tax bracket will have to pay the tax, rent their home out, sell or simply move in full time.
Who is safe?
Approximately 99% of people not affected by this new tax. If you own a home and live there all year, if you rent your home for at least 6 months of the year, if you don’t even own a home and are renting or if you own a home outside if the areas that were mentioned above, this new tax won’t impact you. Additionally, if the following apply to you then you are exempt – you are in the hospital or going through medical care, if you are temporarily away from home because of work, if you are in long-term care or in a supportive care facility or if the homeowner is deceased.
The Speculation Tax is aiming to improve livability in popular BC areas by encouraging homeowners to rent out their properties creating more access to housing which is a really BIG positive.
There are also a lot of measures in place to help make the tax more bearable. If you are a BC resident you will be eligible for a tax credit, the maximum amount for this is $2000, and $2000 isn’t something to scoff at. If you own 2 homes the Speculation Tax will only be applied to one of your homes, which is also a bonus. The tax itself is also so easily avoidable if you just rent out your second home or even sell (which is extreme but an option nonetheless). You can also completely avoid the tax if your home is valued at less than $400,000.
Even though there are exemptions in place to protect residents these exemptions take 3 months to be approved so this can be a real set back for some people. There is also a lot of chatter about the tax impacting the value of recreational homes in the areas where it is enforced, which could have a negative impact on tourism.
Some people have been petitioning against the Tax due to all of these cons, which is really not helping the Tax move along smoothly. It’s almost like a tightrope walk at this point, no one really knows what’s going to happen in the future as so many people are all for the tax and so many are completely against it. While the tax has been approved and implemented who knows how long it will remain in place.